Question 1

When the free rider problem is present in a market:

Accepted Answer

A)   what people pay often does not reflect the real value they put on a good.
B)   the good will likely be over consumed.
C)   the good is rival in consumption.
D)   the good is easily excludable.E) A) and B)
F) A) and C)

Question 2

Streaming Netflix movies would be considered:

Accepted Answer

A)   a common resource.
B)   a private good.
C)   a public good.
D)   an artificially scarce good.E) C) and D)
F) B) and D)

Question 3

Goods that are rival in consumption,but not excludable are:

Accepted Answer

A)   a common resource.
B)   a private good.
C)   a public good.
D)   an artificially scarce good.E) All of the above
F) A) and D)

Question 4

Nonexcludability,in the case of rival goods,causes:

Accepted Answer

A)   inefficiently high demand.
B)   inefficiently low demand.
C)   efficient, high demand.
D)   efficient, low demand.E) All of the above
F) None of the above

Question 5

To combat the undersupply of public goods,a solution is:

Accepted Answer

A)   for the government to step in and provide it directly.
B)   to place a quota on the consumption of the good.
C)   to change social norms around consumption of the good.
D)   put a quota on the amount that people can consume.E) B) and D)
F) B) and C)

Question 6

A modern example of privatizing a common resource is:

Accepted Answer

A)   patents.
B)   quotas.
C)   taxes.
D)   subsidies.E) A) and B)
F) All of the above

Question 7

When the free rider problem is present in a market the good:

Accepted Answer

A)   will be oversupplied.
B)   will be under consumed.
C)   is rival in consumption.
D)   is not excludable.E) B) and D)
F) A) and B)

Question 8

When what people pay does not necessarily reflect the real value they put on a good,it is likely that the:

Accepted Answer

A)   free rider problem does not exist.
B)   good will be undersupplied.
C)   good is easily excludable.
D)   not a socially desirable good.E) A) and C)
F) A) and D)

Question 9

Which of the following is not a consideration when attempting to eliminate a free rider problem or tragedy of the commons problem?

Accepted Answer

A)   The social costs must be realized by the individual.
B)   Something must be done to alter individuals' trade-offs.
C)   Market participants must internalize the value of the externality.
D)   Firms must be forced to provide the good or service at a price that is below profit maximizing price.E) B) and C)
F) All of the above

Question 10

All solutions to market failures in markets for public goods or common resources:

Accepted Answer

A)   try to force the internalization of externalities.
B)   must be provided by the government.
C)   are not perfect, and total surplus cannot be maximized in these markets.
D)   need to be accepted by the affected parties to be effective.E) A) and B)
F) A) and C)

Question 11

The similarity between markets for common resources and markets with externalities is that:

Accepted Answer

A)   the equilibrium quantity is too high in terms of society.
B)   the price that competitive firms charge does not capture the true costs and benefits of consumption.
C)   government involvement is needed to reach an efficient outcome.
D)   generally we get an oversupply at market.E) B) and D)
F) A) and B)

Question 12

An example of a good that is rival in consumption is:

Accepted Answer

A)   a sweater.
B)   bottled water.
C)   tap water.
D)   All of these goods are rival in consumption.E) A) and C)
F) C) and D)

Question 13

Like negative externalities,tradable permits are useful in allocating common resources because:

Accepted Answer

A)   the depletion of common resources imposes a negative externality.
B)   the problem present in both is overconsumption.
C)   the socially optimal quantity is not the same as the individual consumers in either case.
D)   All of these statements are true.E) A) and C)
F) A) and B)

Question 14

Goods that are not rival in consumption,but are excludable are:

Accepted Answer

A)   a common resource.
B)   a private good.
C)   a public good.
D)   an artificially scarce good.E) None of the above
F) All of the above

Question 15

The costs involved with breaking a ban placed on a good depend on all of these except the:

Accepted Answer

A)   punishment associated with rule breaking.
B)   likelihood of being caught.
C)   likelihood of being punished if caught.
D)   ability of the public or individuals to pay for those costs.E) B) and C)
F) None of the above

Question 16

Which of the following is most likely to be over consumed?

Accepted Answer

A)   Sparkling water
B)   Tap water
C)   Bottled water
D)   Free waterE) All of the above
F) A) and D)

Question 17

Bans and quotas ___________ in situations where it is difficult or costly for authorities to monitor and punish rule-breakers.

Accepted Answer

A)   often succeed
B)   sometimes succeed
C)   rarely succeed
D)   always succeedE) B) and C)
F) A) and D)

Question 18

An example of a public good is:

Accepted Answer

A)   health.
B)   cleanliness.
C)   radio signals.
D)   All of these are public goods.E) C) and D)
F) A) and B)

Question 19

Because government bodies have the power to impose limits on how much of a resource is consumed:

Accepted Answer

A)   it can be efficiency enhancing in markets for common resources.
B)   it will always cause deadweight loss.
C)   they decide what is the "right" amount for the public to consume.
D)   they will often correct a market before testing the effectiveness of social norms to correct the problem.E) C) and D)
F) A) and B)

Question 20

Nonexcludability causes:

Accepted Answer

A)   people to demand a higher quantity than they would if they had to pay for what they consumed.
B)   people to demand a lower quantity than they would if they paid for what they consumed.
C)   firms to supply a lower quantity than they would if they incurred the full costs of the provision of the good.
D)   firms to supply a higher quantity than they would if they had to pay for what they supplied.E) A) and B)
F) A) and C)

Exam 19: Public Goods and Common Resources

Bans and quotas ___________ in situations where it is difficult or costly for authorities to monitor and punish rule-breakers.

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The costs involved with breaking a ban placed on a good depend on all of these except the:

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An example of a good that is rival in consumption is:

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To combat the undersupply of public goods,a solution is:

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A modern example of privatizing a common resource is:

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An example of a public good is:

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Because government bodies have the power to impose limits on how much of a resource is consumed:

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Like negative externalities,tradable permits are useful in allocating common resources because:

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All solutions to market failures in markets for public goods or common resources:

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When the free rider problem is present in a market:

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Which of the following is not a consideration when attempting to eliminate a free rider problem or tragedy of the commons problem?

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Goods that are rival in consumption,but not excludable are:

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Nonexcludability,in the case of rival goods,causes:

Correct AnswerverifiedShow Answer

Goods that are not rival in consumption,but are excludable are:

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Nonexcludability causes:

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The similarity between markets for common resources and markets with externalities is that:

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Which of the following is most likely to be over consumed?

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When the free rider problem is present in a market the good:

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Streaming Netflix movies would be considered:

Correct AnswerverifiedShow Answer

When what people pay does not necessarily reflect the real value they put on a good,it is likely that the:

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